A Stronger Foundation: How a Refundable State EITC Can Support Child and Workforce Development

Publication Summary:

The Earned Income Tax Credit is a refundable tax credit available to lower-in-come families to help offset living expenses. Due low wages and the recent Great Recession, many working poor families are unable to meet their basic needs. Despite low wages, the Earned Income Tax Credit (EITC) allows families to keep more of their yearly earnings, and in 2013 helped over 6.2 million Americans rise above the Federal Poverty Level. The Earned Income Tax Credit has wide bipartisan support, and is shown as one of the most effective anti-poverty programs in the country. To strengthen the effect of the federal credit, twenty-five states and the District of Columbia offer refundable state Earned Income Tax Credits. State EITCs are modeled on the federal credit, making them easy to enact. As these credits are only available to working individuals, the EITC encourages work, helps families make ends meet, and reduces the burden of poverty. With the income supple-ment they receive, families are better able to pay for transportation, childcare, and other expenses that allow them to work.

Author(s): Keller Anne Bumgardner Ruble
Publication Date: October 2015
Publication Type: Policy Brief
Publication Topic: Financing
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